Quick answer: The Federal Reserve does not set interest rates on a fixed calendar or on any one official’s opinion. Rate decisions are made by the Federal Open Market Committee (FOMC), which meets eight times a year and weighs incoming data on inflation and employment against its dual mandate. Because those decisions move borrowing costs and risk appetite, markets, including crypto, react sharply to them. The most reliable signal of the Fed’s intent is its own statements, not commentary about them.
By Jake Claver. Educational content, not investment advice.
Federal Reserve policy on interest rates shapes borrowing costs, asset prices, and the broader appetite for risk across every market, including crypto. When the Fed signals its next move on rate cuts, investors across asset classes adjust positioning in response. The trouble is that most of what circulates about “what the Fed will do next” is speculation layered on top of speculation. This piece focuses on how the decision actually gets made and why it matters, using the Fed’s own primary sources.
Who actually sets US interest rates
No single person sets US interest rates. That authority sits with the FOMC. According to the Federal Reserve’s FOMC page, the committee holds eight regularly scheduled meetings per year and has twelve voting members: the seven members of the Board of Governors, the president of the New York Fed, and four rotating regional Reserve Bank presidents. The chair leads the committee and its communications, but the chair casts one vote among many.
That distinction matters right now because Fed leadership has changed. In May 2026, Jerome Powell’s term as chair ended, and the Board named Kevin M. Warsh as the incoming chair, with Powell serving as chair pro tempore during the handoff, per the Fed’s own May 15, 2026 press release. Powell has remained on the Board of Governors. The point is not the personalities: it is that the rate-setting framework outlives any one chair, and betting on a headline about a single official’s “position” is a fragile way to read policy.
How the Fed makes rate decisions
The Fed’s monetary policy framework is built around a dual mandate that Congress assigned it: maximum employment and stable prices. In practice, the committee describes the goals as “maximum employment, stable prices, and moderate long-term interest rates,” with an inflation objective of 2 percent over the longer run.
Crucially, the Fed frames its decisions as data-dependent rather than pre-scheduled. Each meeting weighs the latest readings on inflation, the labor market, and financial conditions. The Fed also periodically revisits how it operates: it has run a public review of its “Monetary Policy Strategy, Tools, and Communications,” which reinforces that the approach adapts to conditions rather than following a rigid, predetermined path. That is why the Fed rarely commits to a specific future move: it is trying to keep its options open until the data forces a decision.
Why rate decisions ripple into markets and crypto
Lower rates generally reduce the cost of borrowing and can push investors toward higher-risk, higher-return assets, since safer options like Treasuries and savings yields become less attractive. Higher rates do the opposite, pulling capital back toward cash and fixed income. Crypto markets, being more speculative than traditional equities, tend to react with outsized moves in either direction.
None of that makes any single outcome a certainty. Digital assets sit at the far end of the risk spectrum, which is exactly why they amplify shifts in rate expectations, and why regulators such as the CFTC treat parts of the crypto market as commodity-linked and volatile. The sensitivity cuts both ways: the same mechanism that lifts crypto when rates fall can pressure it when the Fed signals it will hold or hike.
What to watch instead of trying to predict
Rather than trying to guess the FOMC’s next move, pay attention to what actually gets said in official statements: the inflation target, labor market data, and the specific language used around data-dependent decisions. The Fed’s own communications, not the commentary about them, are the most reliable signal of intent. A few concrete things to track:
- The post-meeting FOMC statement and the chair’s press conference, published on federalreserve.gov after each of the eight meetings.
- The Summary of Economic Projections, which shows where committee members expect rates to go.
- Core inflation trends relative to the 2 percent objective, and the state of the labor market.
Why this matters for how you position
Because rate policy shifts on a schedule tied to economic data rather than a fixed calendar, portfolios built around a single rate-cut outcome carry real risk if that outcome does not arrive on time. A more durable approach is structuring holdings, whether in digital assets, equities, or cash reserves, so that you are not forced into major decisions the moment a Fed announcement lands. Diversification across time horizons tends to matter more than trying to call the exact timing of a cut. This is general education, not a recommendation: your own situation, tax picture, and risk tolerance should drive any decision, ideally with a qualified professional.
Common questions
How does the Federal Reserve decide whether to cut interest rates?
Rate decisions are made by the Federal Open Market Committee, which meets eight times a year and weighs incoming data on inflation and employment against its dual mandate of maximum employment and stable prices. The Fed describes its approach as data-dependent, meaning it does not commit to a fixed schedule of cuts or hikes.
Who is the current Federal Reserve chair?
Jerome Powell’s term as chair ended in May 2026, when the Board named Kevin M. Warsh as the incoming chair. Powell has remained on the Federal Reserve Board of Governors. The chair leads the FOMC but casts only one of twelve votes on rate decisions.
Why do Fed rate cuts affect crypto and stock prices?
Lower rates reduce borrowing costs and make safe assets like Treasuries less attractive, which can push investors toward higher-risk assets such as stocks and crypto. Higher rates reverse that pull. Crypto tends to react with larger moves because it sits at the speculative end of the risk spectrum.
How many times does the FOMC meet each year?
The FOMC holds eight regularly scheduled meetings per year. After each meeting it publishes a statement, and the chair holds a press conference, both available on federalreserve.gov.
What is the Federal Reserve’s inflation target?
The Fed targets 2 percent inflation over the longer run as part of its price-stability mandate. It balances that objective against its maximum-employment mandate when setting the federal funds rate.
This content is educational only. It is not tax, legal, or investment advice. Check primary sources and speak with a qualified professional before making financial decisions.
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